Startable – Healy Jones’ & Prasad Thammineni’s Blog

We’ve been having a lot of luck with our online videos. At OfficeDrop, we use them both as teasers/commercials to get people interested in using our services and as how-to videos that explain features and integrations. People seem to like them, and we see a real correlation between people who watch the videos (even a portion of them) and who sign up as customers. Here is an example of our main “teaser” intro video – I’m going to have to update it soon based on several new features that we’ve recently introduced.

I also try to use them as “link bait” i.e. putting some educational content out there and hope that other link to it based on the good info we basically give away; see our digital office page as an example. Online video is a pretty important part of our site and building and marketing strategy.

Prasad has a new post on Small Business Trends that lays out some simple tips for creating better online video. If you have a site, I’d recommend using simple online videos to promote and sell your service. Or at least make it more personal and give potential customers the chance to see what you look like and “bond” with you!

I’ll be speaking at a very cool event next week in Cambridge on the 5th in the evening. The event is called “Customer Development: The Second Decade — with Steve Blank’s co-author Bob Dorf.” Come out and hear some pretty interesting folks talk about startup marketing. The main speaker will be Bob Dorf, and the event is moderated by Simeon Simeonov. Other speakers include:

• David Cancel, serial entrepreneur and founder of Compete, Lookery, Ghostery and Performable.
• Andy Moss, founder and CEO of ESMZone.
• Andy Greenawalt, founder and CEO of Perimeter eSecurity and Continuity.net.
• Healy Jones, founder of Startable and VP Marketing at OfficeDrop.
• Rob May, founder and CEO of Backupify.

The event is free (sponsored by General Catalyst, a local venture capital firm.) To register for the customer development event click here. The event will start at 6 PM and will be hosted at Microsoft’s NERD Center, One Memorial Drive in Cambridge, MA. Everyone should come!!

The conference is organized by General Catalyst Partners and FastIgnite. Bob Dorf will provide an exclusive peek “under the covers” at some of the many new rules and advancements that Steve Blank, Bob and the ecosystem of thousands of entrepreneur, marketer and investor practitioners have developed over the past several years. The event will feature a keynote by Bob, guest appearances by entrepreneurs and executives who have successfully applied customer development in their businesses and a discussion led by General Catalyst Executive in Residence and FastIgnite CEO Simeon Simeonov.

I recently did a post on DIY Marketers, a site dedicated to helping CEOs with limited budgets get the most out of their marketing, called “5 Tips For A More Professional Website.”

We learned a lot at OfficeDrop when we remodeled our website, and these are 5 things I think many small businesses (and startups) should be doing on their website – things I often see overlooked. They mainly revolve around the idea of generating “social proof” that your service/product is trustworthy and worth putting money into.

Along the lines of my recent series on what makes a good platform (part one, part two) Shaival Shah has a post on how Hunch uses its API to drive growth.

16 Ventures, a firm that helps SaaS companies with their marketing, has just posted a piece comparing 3 different SaaS vendors’ pricing pages. The key takeaway – don’t lose the marketing message on the pricing page; it’s not just a checkout page but it’s another opportunity to hit home the main marketing message. I am committing this foul on my own pricing page…

Worth checking out for people launching their own SaaS service.

http://sixteenventures.com/blog/is-your-pricing-page-a-momentum-killer.html

Dharmesh Shah has yet another great post on his blog about building a sales team. He mentions the need to set compensation structures correctly, making sure you are tracking sales metrics thoughtfully and talks about the culture shock of experiencing a sales team from an engineer’s perspective.

When I was a VC I noticed that portfolio company boards spent a long time talking about the sales team. Assessing progress vs. the company’s goals, talking about lifetime value of customers vs. acquisition cost, and putting together compensation plans. Now that I’m playing the entrepreneur game, I myself am trying to understand exactly where the the fine line lies in setting a company’s sales projections. I’m really getting the feeling that it is much more of an art than the illusion of “science” given by spreadsheets! It is much harder on the inside, and now I wish I had provided more support to my portfolio companies when I was a VC and when they were working through these issues. I guess the numbers have to “come from the management” so that they are totally bought in, but the amount of effort required to do this thoroughly is pretty amazing.

Should startup founders spend time creating a crisp elevator pitch? Yes! Let me explain what got me thinking about this…

I recently received an email from a student in Texas who is thinking of starting a business. He stated, “I’m 23, I have my eyes on an idea with IP that’s protected, I’m piecing together a business model, and I’m doing all in my power to make this happen. The problem is that I’m so young I don’t have many industry contacts and, even though I’ve yet to try, I think it would be difficult to get a VC to sit down in the room with me and listen to my proposal because I’m so young. I think because of my youth they may not take me seriously even though the idea is solid, potentially very profitable, and has IP security. ”

My advice to him was that if his idea was good, and if he could articulate it well, then he could make smart people interested in helping him. First he should get together a smart elevator pitch and then approach potential advisers who could help him evaluate his idea’s probability of success, firm up the business plan and then introduce him to capital sources and team members. I really think a crisp elevator pitch will be critical in getting experienced people to lend him a hand. (I guess I just articulated it better here that I did in my emails to him! Sorry Steve!)

What is an elevator pitch?

Venturehacks has a great post on how to prepare an elevator pitch for an investor and says, “the major components of the pitch are traction, product, and team.” If you are preparing to raise venture capital you must read their take on the elevator pitch.

But I think that an elevator pitch has an importance greater than just impressing investors. If you are a startup, no one has ever heard of you. No one knows what you are doing. No one knows how or why they should lend you a hand or buy your product or make an introduction to someone who could join your team. You need to be able to let people know what you are up to quickly, and interest them enough to get them thinking about how they can help you build your business.

An elevator pitch is a short description that will help the entrepreneur quickly explain the purpose of their startup to someone who has not heard of the company before. I think you should have a single elevator pitch (that you occasionally tailor to a specific audience, such a customer or investor or potential team member). You will need to have practiced this pitch to the point where you can recite it in your sleep, because you never know when you’ll be in front of the CTO of a potential customer or find the VP of Sales that you’ve been dreaming of for months. Make that first impression a solid one.

Here is my take on how to get a good elevator pitch put together:

1. Problem definition
2. Size/magnitude of problem
3. Your solution, including why it is better
4. Your company’s traction
5. Who you are

I don’t think your elevator pitch should be more than 30 to 45 seconds long. (And you probably don’t want to talk at light speed, unless you are pitching a speed speaking product – lame joke.) If the listener is interested then they will ask you questions and you can elaborate on the points that interest them.

I’m not convinced that my formula for a good elevator pitch is perfect, nor is it the only way to create an effective pitch. I’d love to hear other people’s ideas on elevator pitches that have worked for them.

Having spent some time over at TechStars, it is pretty clear that the TechStars founders take the elevator pitch very seriously. The teams are forced to play with their elevator pitch over and over –  practice, modify, get feedback on and practice. These pitches are not focused for particular audiences – rather they are generic pitches that would be interesting to customers, investors and people who might want to pitch in with their time or introductions. My experience at TechStars has really re-inforced the impression that an articulate elevator pitch is very important for pretty much any entrepreneur. After all, you never know when you’ll bump into the person who will somehow help your startup take over the world!

I was recently turned onto an academic post on the the “Success of Persistent Entrepreneurs.” Two HBS professors have recently concluded that repeat entrepreneurs who have been successful in the past are substantially more likely to have success in their second venture than novice or previously failed entrepreneurs. This study centered around entrepreneurs whose first startup raised venture capital: 

“Successful entrepreneurs in the study had a 34 percent chance of succeeding in their next venture-backed firm, compared with 23 percent for those who previously failed and 22 percent for first-timers.”

This is something that venture capital firms have been acting on since … well, since I know about! (Of course, I haven’t been doing this long enough to really know when it started, but I’m pretty sure VCs have always preferred to work with previously successful entrepreneurs.) Given a choice between two equally affable, competent seeming, well regarded founders with similar business plans, VC’s will pick the previously successful entrepreneur to back every time. 

So what can you do if this is your first time as a startup founder and you are looking to raise venture capital funding? (Or I guess if you’ve failed at your first?) Attract a successful entrepreneur to your team! VCs LOVE LOVE LOVE getting involved with successful entrepreneurs’ projects, so go get yourself a successful entrepreneur! While it would be best if you can get them to join your management team – and by best I mean what the VC would like best, maybe not what you would like best – you can still get some of this successful entrepreneur pixie dust by having this person join your board or by having them as an active advisor to the business.

How do you meet a successful entrepreneur? Hopefully you can easily network to one in or around your particular industry. Conferences, industry networking groups or trade associations, or even lawyers can help you. Some of the young startup founders I’ve spent time with have literally cold called successful entrepreneurs and gotten them to become advisers of their startup. If your idea is good enough, and if you can explain it well enough, you should be able to attract the right people to your side.

I came across this HBS blog post from Darmesh Shah’s twitter feed (OnStartups) – I’d suggest you follow him, as he comes across some pretty interesting stuff.

Julien Wallen had an interesting comment on my recent blog post on new year’s resolutions – in particular my resolution to attend more technology conferences in 2009. He quite astutely questioned if technology conferences had a positive ROI, “But I’m somewhat cautious about conferences. My experience is that either you need to prepare really really well to make best use of the time or the ROI is really questionable – that is with a startup budget not a VC one ” So, I’d like to see if I can get a discussion going around this, and thought I’d offer up a venture capitalist’s opinion on technology conferences so that entrepreneurs could get a bit of a feel for if and how technology conferences might fit into their venture financing strategy. (read Julien’s blog post response on the ROI of tech conferences here)

Are technology conferences worth the cost?

Is there a positive ROI for a VC to attend a technology conference? 

Of course the answer is that It Depends!

Wow, what a cop-out answer!

As a venture capitalist, I attend conferences for one of three reasons (I reserve the right to increase the number of reasons if more become apparent.)

1. Meet new startups – conferences can be a very good place to meet new startups and find new potential investments.
2. Fill in an investment thesis – industry specific conferences can be great places for a venture capitalist to refine an investment thesis and learn more about the competitive landscape in an industry, get a feel for customer needs, the next generation of technology, best practices, etc.
3. Support an existing portfolio company – a good venture capitalist makes introductions that help portfolio companies succeed. Conferences can be great places for a VC to facilitate in person meeting between portfolio company executives and critical players in that company’s ecosystem. (In my short, not particularly illustrious career as a VC one of my shining moments was at a conference where I introduced a portfolio company CEO to several players, one of whom ended up becoming a large customer of the company and another of whom is now a serious channel partner for the business. The CEO compensated me with a cookie at a board meeting – a very tasty cookie.)

How does a venture capitalist make the conference worth the cost?

Preparation! In a prefect world, my conference schedule would be almost as scheduled as a day in the office, with back to back meetings with entrepreneurs and key players. Of course, one of the advantages of a conference is the ability to “wander” around and “bump into” people/companies that have been difficult for me to reach – and having a game plan in advance on who and which people/startups I want to “randomly” meet is pretty critical.

As an entrepreneur, how should technology conferences fit into my venture financing strategy? Read the rest of this entry »

One thing you must do before starting a new business is to talk to potential customers. Make sure you can answer the question, “who is going to buy/use this?” Figure out as much about your potential customer base early in your startup idea generation and then apply that knowledge against what you are trying to accomplish. Sitting down with and listening to potential customers before beginning your startup can help you justify all the effort you are about to expend, can help you focus your development on the exact solution that the market needs and can help you understand how to create a the right product positioning.

For some reason some consumer focused startup CEOs like to tell venture capitalists, “even my Mom/Dad will use it!” Of course your relatives will use your product; they’re your parents! Your Mom is not a focus group. Use online surveys. Find expert or passionate bloggers in the space that you are targeting and speak with them. (Yes, these people will likely talk to you, and if you’re eventually going to talk to venture capitalists about funding your business, you’d better get to them first, because VC’s will make those calls while they are evaluating your opportunity…) Talk to sales people targeting similar users. If you’re selling to big corporations, have you reached the people who will be buying your solution?

Read the rest of this entry »